Pandemic shopping trends
Interesting peek into human behavior in the apocalypse.
These are interesting times for me. I work with businesses that are in grocery and retail and my career has been generally in supply chain technology.
The pandemic has created the conditions for an interesting experience. What happens when you lock everyone in their houses and put them under stress? How does that change the way they bnuy things and through that lens, what does it tell us?
First, you have all seen the panic buying when we entered the pandemic. When all the toilet paper and disinfectant was cleared from the shelves.
The toilet paper was interesting. Did people start pooping more as we went into lockdown? No. There was some hoarding but mostly the toilet paper was just in the wrong place. Or, more specifically, in the wrong supply chain.
Think about it. Where did people poop before lock down? Out in the world. At the office. At a restaurant. Etcetera.
And when you’re in the office restroom you may notice that toilet paper is different. It comes on a big role. Or some other industrial sized type thing.
It turns out the companies that supply TP to businesses are different. They have their own warehouses and trucks. The manufacture of these office-type product packages is different as well.
It is a entirely sperate supply chain.
When we shifted all those people to their homes there was no way to quickly redirect those industrial supply processes. The toilet paper was still there. But you could get to it or use it.
Same thing it true for groceries. All the food that used to be consumed in cafeterias and restaurants shifted to homes. This led to an increase in grocery sales across categories of 20-30%. Your local grocery store had a lot more revenue last year.
That also caused supply problems as those retailers had to find the extra product to support these increases in demand.
But did they make more money?
That’s a bit of a wash. They had to spend a bunch of money on extra health and safety measures for their employees and customers, and much of the increase was to online shopping, home delivery or buy online pick up at store, which is more expensive for the grocers.
The other big shift that has been getting a lot of press is the shift to eCommerce and home delivery. This business increased by 20-40% for most retailers. This shift to online shopping has been growing at a double-digit pace for two decades but the pandemic kicked it into overdrive.
Retailers are still trying to figure it out. They are designed to ship stuff to stores, put it on the shelf and have people come and get it.
When they have to pay someone to go out into the store and pick the product for the customer and then pay someone else to deliver it, it costs more. Why that matters is that these ore high-volume, low margin businesses. In some cases they actually lose money on these eCommerce orders.
But they are getting better. This has precipitated a rapid development of systems to support the eCommerce business model. Like inventory promising.
The other obvious trend is that people are making fewer trips to the store and when they do they are buying more. This is called ‘basket size’ in the retail world.
Basket sizes are up.
The other impact was a shift to larger pack sizes. When people make fewer trips and get more stuff they look for bigger packages.
The exception to this is convenience items. Convenience stores have done really well as people seek to avoid going into stores and staying in stores, they will zip in and out of a smaller format and grab something prepackaged to eat.
It’s a wash for the C-stores though, because they also sell gas to commuters, who have stopped commuting. Less gas is sold, but lots of lottery tickets as people dream of cashing out on a big win.
All this makes sense, right? But it caused stress with the supply chain. Supply chains don’t’ deal well with highly variable demand.
By the way, if you’ve been paying attention, you may have noticed everything costs more as well. In a low margin world, all they can do is pass that cost on to you, my friend.
What else is going on?
People being trapped at home caused a big increase in everything home goods. If you want new furniture, you’ll have to get in line because everyone else does too. All of that home décor, homegoodsy stuff is selling out.
And, of course, we as athletes know that everything home fitness sold out as well. All the bikes, treadmills, and weights were cleared for those home-workouters. I hope they actually use it.
I’m thinking in 6 months the home gym aftermarket is going to be a thing. You will probably just drive around the rich neighborhoods on a Saturday and pick up treadmills from the curb.
Home organizing stuff and home office stuff also surged. Interestingly spa-scented candles sold out. Some of you are burning candles and incense to stay sane while you talk to me on the Zoom calls.
Home entertainment sales went up too. Games and puzzles as well as computer games were hot sellers.
Another interesting thing is that the internet infrastructure companies that provision all the hardware in data centers around the world have been booming as everyone works remotely.
Outdoor activities have increased. Fishing stuff, hiking stuff, gardening supplies, anything to do with puttering around outside on an afternoon has been selling well.
I see these people out hiking in my woods now. There seems to be a healthy refocus on family time and exercise.
The data shows this. People are trending to buy healthier options. But, at the same time they are doing a lot of comfort buying too. It’s a mix as different people deal with the changes forced on them by the pandemic in different ways.
I’m guessing the weight loss industry is going to see a big boom as we all try to squeeze back into work clothes for the office.
All of this is very interesting to me. It is an event that is unique to our lifetimes, hopefully. An experience in quarantine. I’ll be interested to see how it changes us in the long run.